Real Estate Glossary

Commercial Terms:

OM = Offering Memorandum - This is a basic overview and business plan of the property and projected returns provided by the seller or broker.

IRR = Internal Rate of Return - The annual rate of growth that an investment is expected to generate.

ARR = Annual Rate of Return - A process for determining investment returns on an annual basis.

Rent Roll = The current rent rates per occupied unit and lease information including length of lease and other information about the units.

Whisper Price = The term "whisper price" in commercial real estate refers to an informal or unofficial asking price for a property that is communicated privately among potential buyers, sellers, or brokers. Unlike the listed or advertised price, the whisper price is not publicly disclosed, and it is often shared discreetly within the industry.

Super Fund = "Super Fund" or "Fund of Funds" typically refers to a type of investment fund that invests in other funds rather than directly in individual securities, such as stocks or bonds. In the context of investing, a "Super Fund" or "Fund of Funds" pools capital from multiple investors and allocates it to a diversified portfolio of other investment funds, which may include hedge funds, private equity funds, or other types of managed funds.

General Real Estate Terms:

Going Hard

This is a term to refer to earnest money or a portion of earnest money being non-refundable.

Driving for Dollars

A term that real estate investors use to describe a technique for finding great deals on houses. You drive around until you find a house that looks vacant or distressed and then attempt to buy that home from the owner(s).

Earnest Money Deposit (EMD)

A buyer can submit an earnest money deposit, which is most often a percentage or flat fee deposited early in a transaction to show a commitment allowing something to be placed on hold. This allows the buyer time to get affairs in order and not entertain other offers. If a deal goes through the EMD is applied to the purchase and if the deal falls apart, the EMD goes to the seller.

Easement

An easement is the right to use a piece of land granted by someone who does not own the land. This is often used by government or utility companies to access underground infrastructure. Easements can impact land value, but most of the time, the homeowner has little control over the result.

Encroachment

Encroachment refers to a dispute, often occurring between neighbors, in which one person's perceived property line crosses parcel boundaries. Conflict arises when one neighbor has personal belongings, a fence, trees, etc., crossing into the other party’s parcel.

Equity

The difference between the market value of your home and the amount you owe the lender who holds the mortgage. It is the amount a homeowner would receive after paying off the mortgage when the home is sold. To calculate equity, take the market value of the home and subtract any mortgages or liens against the property. The amount leftover is the amount of equity you have in the home. Homeowners can leverage their equity to obtain loans to help finance items such as home repairs or to pay off higher interest debt.

​​Escalation Clause

When buyers anticipate multiple offers on a property they are looking to purchase; they can include an escalation clause in the contract that lets them increase their offer by a predetermined amount.

Escrow

Escrow refers to the phase of a transaction where both parties have reached an agreement. The escrow holder is a third party hired to handle the transaction, including the exchange of money and all associated documents.

Escrow Holder

The escrow holder is the agent and depositary (impartial third-party) who collects the money, written instruments, documents, personal property or other things of value to be held until the happening of specified events or the performance of described conditions, usually set forth in mutual, written instructions from the parties.

Estimated Equity Percentage (EP)

Estimated Equity Percentage is the value obtained when a property's equity is divided by its Estimated Value.

Estimated Value

The value the assessor estimates a property would likely sell for on the open market.

Failed Listing

A failed listing is when a property listed on the MLS fails to sell and the listing is taken off the market.

FHA Loan

Backed by the Federal Housing Administration, FHA loans are most beneficial for applicants with lower credit scores and down-payment amounts.

Fiduciary

A real estate agent and their client may choose to enter a fiduciary relationship, where one party has the legal right to act and make decisions on behalf of the other party.

Filter Stacking

Filter Stacking is used by investors and agents that know the exact leads they are looking for.  Essentially, when a user combines two or more of our 120+ filters, they are ‘filter stacking’. This differs from list stacking, which combines two or more lists to see how many times a property exists across the stacked lists. 

Flipper

Quick-profit strategy in which an investor purchases real estate at a discount price and improves the property in order to sell it at a higher price. This can be very lucrative profit strategy if the housing market is doing well. Old homes and foreclosures are popular properties used in house flipping because investors can acquire these properties cheap, thus increasing the potential profit.

Fixed-Rate Mortgage

Refers to a home loan that has a fixed interest rate for the entire term of the loan. Fixed-rate mortgages are chosen by consumers who want to know how much they’ll pay every month. Fixed-rate mortgages tend to have higher interest rates than variable-rate mortgages.

For Sale by Owner (FSBO)

A seller may choose not to involve a real estate agent in the sales process. When this happens, the seller takes responsibility for every aspect of the transaction - from showing the house to overseeing the negotiations and entering escrow.

Foreclosure

A legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Foreclosure Sale

Occurs when the bank exercises its “lien” rights and sells a home at auction. The bank obtains a lien (an ownership interest in the property) when a borrower takes out a mortgage. The bank will use either a judicial or nonjudicial foreclosure procedure, depending on the state’s process.

Free & Clear

Free and clear means there are no encumbrances secured to the property, such as a lien or mortgage.

Funnel

A funnel is the series of steps a person takes from a prospect to a formal client. Securing a formal client often includes marketing strategies like networking, phone calls, emails, and postcards to eventually negotiate a formal purchase.

Home Equity Line of Credit (HELOC)

A line of credit secured by your home that gives you a revolving credit line to use for large expenses or to consolidate higher-interest rate debt on other loans such as credit cards.

Homeowner Association (HOA)

A HOA is a private association often formed by a real estate developer for the purpose of marketing, managing and selling homes and lots in a residential subdivision.

Homeowner Association (HOA) Lien

A lien is a legal claim or hold on a piece of property. Among the types of liens out there, a HOA lien is a judgment lien that results from a court-ordered money judgment. An HOA will go to court over a homeowner member's delinquent dues and attempt to convince the court to issue a judgment. HOAs can record judgments that they obtain against homeowner members against those members' homes.

House Hacking

Generating income from your home. There are different types of house hacks, but a common strategy is to buy a multifamily dwelling, live in one unit, and rent out the others. The rent from the tenants pays the mortgage while the owner maintains the property and builds equity.

Interest

Interest is the cost of borrowing money, usually defined as an annual percentage and paid as part of a monthly loan payment. Mortgage interest rates fluctuate depending on the market, but once a borrower enters a fixed-rate mortgage loan, their interest rate will not change for the entire loan duration.

Intrafamily Transfer

A transfer of ownership or management of an operation between or among individuals who have a familial relationship including parent, spouse, child, sibling, grandchild, grandparent, stepparent, stepchild, step-sibling, step grandchild or step grandparent.

Involuntary Lien

A non-consensual claim to the property of another as collateral to ensure the repayment of a debt. An involuntary lien may be imposed by a court, often for non-payment of taxes. The involuntary lien gives the tax authority (or other body) the right to confiscate one’s property if the debt is not settled.

Joint Venture (JV)

A real estate joint venture is a deal between multiple parties to work together and combine resources to develop a real estate project.

Leaseback

A leaseback is an agreement between buyers and sellers allowing the seller to rent the property from the buyer for a predetermined amount of time after closing. A leaseback helps the seller by providing additional time in the home after the transaction while also allowing the seller to use money from the transaction on their next home purchase.

Lenders

A lender is an individual or business that loans out large sums of money. Lenders can offer student loans, mortgage loans, car loans, construction loans, or personal loans.

Lien

When a homeowner owes on a debt and their home is used as collateral, a “lien” is placed on the home. Liens are typically placed by mortgage companies but can be placed by other businesses like mechanics or utility companies.

Lien Released

Used to cancel a lien that has already been filed. Lien releases are also referred to as a release of lien, cancellation of lien or a lien cancellation. These are typically used to cancel the filed claim for public records.

Lis Pendens

A written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the county land records office

Loan Contingency

A loan contingency is a clause or addendum (also known as a mortgage contingency) in an offer contract that allows a buyer to back out of a deal and keep their deposit if they are unable to secure a mortgage with specified terms during a fixed period of time.

Loan Officer

A loan officer acts as a representative at a financial institution like a bank or credit union. They assist borrowers with the application process and must possess extensive knowledge about rules and regulations within the banking industry, lending products, and documentation required for taking out a loan.

Local Owner

Property owner within the same county as the property.

Lot Size

The lot size is the living space plus front and back yard (total land space).

Mechanics Lien

A security interest in the title to property for the benefit of those who have supplied labor or materials that improve the property. The lien exists for both real property and personal property.

Monthly Rent

An estimate of what a property could rent for monthly. This can relate to a single-family home, apartment, condo, or even a room within one of these buildings.

Multiple Listing Service (MLS)

An MLS is a database established by cooperating real estate brokers to provide data about properties for sale. An MLS allows brokers to see one another’s listings of properties for sale with the goal of connecting homebuyers to sellers.

Non-Disclosure State

In non-disclosure states, the sales price of real property is not recorded and made available through the public record. There are 12 non-disclosure states (Alaska, Idaho, Kansas, Louisiana, Mississippi, Missouri (some counties), Montana, New Mexico, North Dakota, Texas, Utah and Wyoming).This list may be not be up to date as posted, please confirm

Non-Owner Occupied

A real estate classification that means the property owner does not occupy the property as their personal residence.

Notice of Default

A notification given to a borrower stating that he or she has not made their payments by the predetermined deadline or is otherwise in default on the mortgage contract.

Notice of Trustee Sale

Informs homeowners and mortgage borrowers of record that their home will be sold at a trustee’s sale on a specific date and at a specific location.

Notice of Foreclosure Sale

In nonjudicial foreclosure states, there is no trial. Lenders simply issue a “notice of intent to foreclose,” alerting the borrower that the foreclosure process has begun. They will also need to advertise the sale—usually in a newspaper, for at least a few weeks before the scheduled sale date. The property's actual selling is done via auction, and usually by the local sheriff’s department. In many cases, banks and lenders are forced to purchase the properties back due to a lack of buyer interest. These are then dubbed “bank-owned properties” or “real estate-owned properties” (REOs), and the lender then makes efforts to sell those directly to a buyer. Many banks and larger financial institutions list their REO properties somewhere on their website.

Occupancy Status

Defines the legal situations of households concerning the occupancy of their main residence. Three main statuses can be distinguished:

The status of owner applies to households who are owners, co-owners and becoming owners

The status of tenant and/or sub-tenant applies to households paying a rent, irrespective of the type of accommodation occupied

The status of a free lodger applies to households which are not owners, and which do not pay any rent

On Market

Property that is available to buy

Opening Bid

The first bid of an auction, which is set by the foreclosing lender. This opening bid is usually equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. If there are no bids higher than the opening bid, the property will be purchased by the attorney conducting the sale, for the lender.

Opt-In

Opt-in means that customers or potential customers need to have subscribed to your services in order to receive communications from you.

Out of County Owner

A property that is owned by a person that does not reside within the county.

Out-of-State Owner

A property owner that lives in a different state then the property. Some people find the Return on Investment (ROI) to be better out-of-state, which is the main reason to buy outside the region where you reside. Purchase price, appreciation rates, mortgage expenses, taxes, housing regulations, rental market conditions and more factors might be more favorable in another state and will contribute to a property’s potential ROI.

Owner Occupied Property

An investment property you buy to generate income, but also live in yourself. For a home to be classified as having an owner occupant, a property needs to be the landlord’s primary residence; a second home doesn’t qualify.

Owner Type

There are three types of property ownership.

• Individual Ownership/Sole Ownership: When a property is bought and registered in the name of one individual, s/he alone holds the ownership title of the property.

• Joint Ownership/Co-ownership: When a property is registered in the name of more than one individual, the property is deemed to be under joint ownership. There is no difference between joint ownership and co-ownership of property – the two terms can be used synonymously. There are several ways to own a property jointly:

• Joint Tenancy: When the title deed of the property works on the concept of unity and provides each joint owner equal share of the property.

• Tenancy in Entirety: This form of ownership is tenancy between married people.

• Tenancy in Common: When two or more people jointly hold a property without holding equal rights.

Passive Investing

An investment method that does not require continuous or extensive effort from the investor to maintain. This includes Real Estate Investment Trusts (REITs), remote ownership, and real estate funds. A passive investor typically does not deal directly with the investment, but goes through 3rd parties, and may never even visit their properties.

Pending

Pending means the seller has accepted an offer from a buyer but hasn’t yet closed. Though most pending home sales go to closing, a deal can still fall through if the buyer can’t get funding, changes their mind about the sale or finds a problem with the home.

Per Diem

“Per diem,” meaning “per day” in Latin, refers to possible charges that are paid to the lender if a loan is not established by the initial closing date set for the home. These charges will be reflected on the Closing Disclosure when completing the sale.

Planned Unit Development (PUD)

The local government sometimes works with new housing developments to determine private areas, common areas, and building guidelines, known as “Planned Unit Developments (PUDs). These developments aren’t subject to standard zoning requirements, and the community will be operated by a homeowner’s association (HOA) once completed.

Pre-Foreclosure

The notice informs the owner that the lender will pursue legal action toward foreclosure if the mortgage debt isn’t paid. The owner can either reverse the default status by making up the late payments or sell the property before it goes into foreclosure. It begins when the lender files a notice of default on the property because the owner has not been making mortgage payments.

Pre-Foreclosure Release

For various reasons, the pre-foreclosure on a property is released. Could be due to paying off the loan, loan modification, etc.

Principal

The principal balance of a mortgage loan is the amount of money owed to the lender, not including interest. Say you borrow $300,000. That’s the principal of the loan or what you borrowed to buy the home. Buyers pay the principal plus interest each month, although calculated daily for most loan type. Payments nearly always go toward interest first, then toward paying down the principal. After all, the interest is the reason the bank agrees to make the loan.

Preliminary Report

A preliminary report reveals any issues with a title that need to be dealt with by the seller in order to deliver a clear title. It gives details such as ownership history, liens and easements. The title company gathers this report by searching existing property records at the county recorder’s office. This report is required for a title insurance company to issue a title insurance policy. Most lenders require borrowers to purchase title insurance coverage to protect their interest in a property. It’s customary in many areas for a seller to pay for this policy, although it is a negotiable item.

Private Lender

Private lenders offer short-term loans with higher interest rates, similar to a hard money lender. While private lenders and hard money lenders offer similar loan terms, a private lender is an individual who is capable of loaning large sums of money. In contrast, a hard money lender is considered a business.

Since private lenders are individuals, the loan terms may be more flexible than they would be with a hard money lender.

Probate

Probate is the legal process of administering a person’s estate after their death. It involves transferring the title from the deceased to next of kin (only if the next of kin is not on the title).

Property Classification

Properties are classified as either residential, non-residential, farmland, linear or machinery and equipment. Some properties have more than one class.

Property Ownership by Nomination

A process under which a property owner can give someone the right over his immovable property and other assets, in the event of his death. This has become a common practice among owners to as a way the landlord can ensure that the property does not remain unclaimed or become subject to litigation after his death.

Property Type

Real estate listings have property types (or building types) fields to describe the kind of property for sale. For example – townhouse, duplex, single family, condo.

Real Estate Auction

A real estate auction is an innovative and effective method of selling real estate. There are two forms of auctions that take place (1) non-distressed auction, which is a situation of an owner looking to sell and profit from equity in the home and (2) distressed auction, which is a situation of the lender, not holder, auctioning off the property to recover debt owed. The distressed auctions typically occur at a courthouse for public bidding and are the final step of the Pre-Foreclosure process. There are also Bank Owned Auctions where a bank that has fully foreclosed on a property decides to auction it off to the highest bidder.

A house may be auctioned if it has been foreclosed on; repossessed by the bank (sold in order to recover the money it originally lent); or the original homeowner owed the government enough money for it to reclaim and sell the house.

Real Estate Comps

A comp, which is an abbreviation for comparable sale, is a recently sold home in a property’s area that’s similar to the property being evaluated in location, size, condition and features.

Real Estate Investing (REI)

REI stands for Real estate investing.  REI involves the purchase, ownership, management, rental and/or sale of real estate for profit. Improvement of realty property as part of a real estate investment strategy is generally considered to be a sub-specialty of real estate investing called real estate development.

Real Estate Owned (REO)

Homes that banks or lenders have foreclosed on are “real estate owned” (REO), or “bank-owned.” In these situations, the banks or lenders own and can sell the homes. If the sale doesn’t occur, the bank can put it up for auction, where the home can be purchased for less than the expected market price.

Refinance

To replace the mortgage of a property with a new one, with better terms.

RVM

Ringless voicemail, also called a voicemail drop, is a method in which a pre-recorded audio message is placed in a voicemail inbox without the associated telephone ringing first.

Seller Carry Back

Owner-provided financing. May also be referred to as seller financing or owner will carry (OWC). The seller acts like the bank, holding the note and collecting payments.

Seller Concession

Sellers may offer concessions to incentivize buyers to purchase a home or make a deal more lucrative. Concessions are most readily seen as a contribution towards the buyer’s closing costs, up-to certain limitations and approvals by a buyer’s lender, which ultimately leaves more money in a buyer’s pocket when all is said and done.

Seller Disclosure

A disclosure by the seller of information about the property or which could affect a buyer’s decision to purchase the property, all of which to the best of the seller’s knowledge. A seller must also indicate items which are not specific to the property itself, but related to a person’s enjoyment of the property, such as pest problems, property line disputes, knowledge of major construction projects in the area, military base related noises or activities, association related assessments or legal issues, unusual odors caused by a nearby factory or even recent deaths on the property as permitted by law.

Settlement

The last stage of a home transaction is when the contract closes, known as the “settlement.” At this time, the ownership of the property is transferred before the buyers, sellers, and real estate agents are paid out

Short Sale

In a short sale, the property is being sold for less than the debt secured by the property. Short sales will require the approval of the seller’s lender(s) as the proceeds for the sale will be just “short” of the amount owed; most lenders’ processes of approving short sales are long and drawn out, requiring more time to close than a traditional sale.

Short Term Rentals (STRs)

a property that is being rented out in small increments rather than a long term lease with a steady tenant. This includes vacation rental properties commonly listed on platforms such as AirBnB, HomeAway, or Vrbo. 

Skip Tracing

Skip tracing is the term used to name the process of locating someone. It is often used by businesses for locating people’s phone numbers and email addresses.

Solar Lien

A lender places a lien on solar equipment for non-payment of the loan, which will remain in place until the loan is paid off. When selling a home with a solar system, either the buyer needs to qualify for and assume the loan and the lien along with it, or the seller needs to pay off the balance of the loan, which will trigger the release of the lien.

Step Investment Rate

A step-up is an interest rate that starts a lower interest rate and allows for the rate to increase at periodic intervals. The amount and extent of the rate increase, as well as the timing, depending on the terms of the mortgage.

Square Footage

The livable square footage between interior walls. Some architects measure the square footage from the exterior walls.

Tax Assessed Value

An assessed value is the dollar value assigned to a property to measure applicable taxes. Assessed valuation determines the value of a residence for tax purposes and takes comparable home sales and inspections into consideration.

Tax Delinquent

An account becomes delinquent when the due date for the tax or other liability has passed and the amount due remains unpaid.

Tax Lien

When a landowner or homeowner fails to pay the taxes on their property, the city or county in which the property is located has the authority to place a lien on the property. A lien is a legal claim against the property for the unpaid amount that’s owed.

Title

A title provides the legal right to ownership of real estate property. Title insurance may be necessary when buying a home and can assist with issues that weren’t discovered early on, such as claims or liens existing on the property. During closing, buyers receive a copy of the title, showing their name(s) as the new legal owners. At this time, the information becomes public record for the county.

Title Search

A title search examines public records for the history of the home, including sales, purchases, and tax and other types of liens. Generally, a title examiner will conduct a search using title plants and sometimes the country records, to see who is listed as the record owner of the property. Such information, along with any liens or encumbrances that are recorded against the property, will be listed in the Preliminary Report for the parties to review prior to the close of escrow.

Traditional Lender

Traditional lenders typically provide long-term loans with lower interest rates, and the lenders are usually financial institutions such as banks or credit unions. These loans are required to follow the rules and regulations put in place by Fannie Mae or Freddie Mac, and the federal government does not back this kind of loan. Additionally, traditional lenders have stricter requirements regarding the credit scores of borrowers.

Trust Sale

A trust sale means the home is being sold by a trustee of a living trust – and not by a private party. Often, this is because the original homeowner passed away or has placed their assets in a living trust. The trustee may not be as emotionally attached to the property as a traditional owner, which could translate to them accepting a less attractive offer as the trustee may prefer to offload the property.

Under Contract

When a seller accepts an offer on their home, the home goes “under contract,” meaning the sale is not guaranteed until all the contingencies are met.

Utility Lien

A legal claim against the property for unpaid utilities.

VA Loan

A mortgage ensured by the U.S. Department of Veterans Affairs and issued by private lenders to assist veterans, service members, and their spouses with buying a home. Typically these loans consist of no down payment and a lower interest rate.

Vacant

A residential property identified by the United States Postal Service (USPS) as uninhabited. Meaning that the USPS has decided they will no longer be delivering mail to a given property's physical address.

Variable-Rate

A variable-rate mortgage is a type of home loan in which the interest rate is not fixed. Instead, interest payments adjust to a level above a specific benchmark or reference rate. These rates are typically taken by homeowners that want a cheaper rate and are comfortable with changes in their monthly payments.

Virtual Assistant

A third party that helps you manage your business.

Walkthrough

A final walkthrough of the property is standard practice to ensure that any repairs or amends the seller agreed to have been made. The buyer agrees to the home's condition at this time, but if any further objections are made, it could delay the closing of the home.

Warranty

A home warranty helps cover the cost of maintenance and repairs with appliances or systems in the home for the first year after purchase. This would help buyers if a home inspection didn’t reveal issues with the appliances or systems during escrow.

Wholesaling

In real estate wholesaling, a wholesaler contracts a home with a seller, then finds an interested party to buy it. The wholesaler contracts the home with a buyer at a higher price than with the seller and keeps the difference as profit. Real estate wholesalers generally find and contract distressed properties.

Zombie Property

A property that is currently in pre-foreclosure and is identified as being vacant by the US Postal Service.